How Fintech Companies Can Benefit From Global Expansion

How Fintech Companies Can Benefit From Global Expansion
How Fintech Companies Can Benefit From Global Expansion

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Fintech was one of the industries that, overall, not only survived, but also benefited from the Covid-19 pandemic. Encouraged by the ever-moving world online, Fintech firms have managed to meet new technological and financial challenges.

Moreover, growth was not limited to national borders. It expanded globally in an unstable economic climate and reaped rich dividends by solving complex problems with unique solutions. Such global expansion offers a number of advantages, but it is not without its own challenges. Fintech firms can navigate these challenges using uniquely tailored partnerships to capture new markets and help build the next generation of digital financial solutions.

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Covid-19 transformed the future of business and the workplace

The Covid-19 pandemic triggered ripple effects that affected the global psyche towards business and the modern workplace. While professionals occasionally engaged in remote work and similar business innovations before the pandemic, global shutdowns significantly accelerated this adoption.

According to Gartner, post-Covid-19, 48% of employees are likely to work remotely for part of the work week, compared to 30% before the pandemic.

A survey from 2022 from Statista can shed light on the reasons behind the phenomenon. People have rediscovered the importance of work-life balance and do not want to let go of the flexibility they gained due to remote working, especially when it comes to saving time and money, choosing their workplace and being more focused on work.

Employers, on the other hand, are also becoming comfortable with telecommuting. They are competing to access a diverse skilled workforce by looking beyond their borders and exploiting gig workers more and more. These modern remote professionals embody the emergence of a new mutually beneficial arrangement for both employer and employee.

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Governments around the world are attracting foreign investment to recover from the devastating economic effects of the pandemic. They are relaxing conventional processes related to business establishment and global expansion, switching to online systems, simplifying applications and allowing verification documents to be submitted later.

These uncertain times and efforts towards recovery created the perfect storm for an already booming industry to take center stage – the Fintech industry.

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Fintech thrived after the pandemic with global expansion

The sudden boom in telecommuting prompted companies to move their operations online. The resulting increase in online transactions, the need for increased cyber security and digital inclusion of developing and pandemic-affected economies led to a rapid adoption of digital financial services.

The fintech industry as a whole coped reasonably well with the pandemic, and the numbers seem to confirm this. According to a study by the World Bank, Fintech companies increased their transaction numbers by an average of 13% in the first half of 2020, compared to the same period in 2019. A large part of this growth came from emerging markets and developing countries, which grew faster than their developed counterparts. As the world was forced to move the entire financial system online, Fintech was naturally poised to support and benefit from the transition. For example, companies around the world were quick to adopt solutions like Adobe Sign when signing contract documents online after global shutdowns made traditional ways of working impossible.

Fintech firms, realizing the huge potential for global expansion in terms of market share, revenue, hiring world-class talent and diversifying investments, are looking to establish their presence in the Asia-Pacific, North America and EMEA regions. Now that governments are willing to reopen their borders, further opportunities are falling into place.

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Due to pre-existing challenges such as lack of funding, reduction of workforce and minimization of fixed expenses, expanding global presence may prove to be one challenge too many. Establishing a presence in a foreign country brings with it a myriad of legal and operational challenges, including but not limited to incorporation, recruitment, payroll and tax compliance.

In a CFO Research survey of 166 senior finance executives, it was revealed that managing foreign stakeholders, navigating international payroll and dealing with long project timelines were the top concerns for companies planning global expansion. Companies can choose to set up a subsidiary in their target geography, but this is costly and time-consuming in terms of set-up. Alternatively, they can choose to work with a full-service global PEO (Professional Employer Organization) such as INS Global.

Companies pursuing this option can outsource all administrative and legal burdens of operating in the new country to their PEO partner. This has the added bonus of speeding incorporation, employment, visa application and legal compliance processes from months to days.

Clients of PEOs based in the APAC region, in particular, can find our PEO services incredibly useful in facilitating their expansion into 30+ countries. Our PEO provides tailored, end-to-end employment solutions to over 600 clients to help them pursue international growth in more than 80 countries.

Fintech represents one of the most advanced and crucial industries for socio-economic development. The global market has the following major advantages for the companies that manage to navigate international waters successfully:

Related: Key opportunities to exploit in Fintech and more

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1. Serving unbanked

The developing countries of the world are still desperately underserved when it comes to effective banking and financial solutions. The World Bank estimates that around 1.7 billion people are unbanked around the world.

Public-private partnerships to solve these problems represent a promising revenue stream for Fintech companies, especially as governments actively stimulate foreign investment and look for new solutions to long-standing economic problems.

2. Catch the digital finance boom

Developing economies also provide markets that actively want to play a role in the development of the Fintech industry. Partnering with foreign entities that are already involved in creating innovative solutions can prove incredibly successful for Fintech firms.

Next-generation industries and technologies, such as Decentralized Finance (DeFi) and Web3, further offer unlimited potential for Fintech companies to seek out international partners and build the future of finance together.

3. Exploring business-friendly geographies

Some countries may have laws that prevent companies from developing and achieving their full potential. In this case, they can instead move their operations to alternative locations that provide a more favorable business environment, while also incentivizing Fintech companies to set up shop within their borders.

Right now, Fintech companies need to assess their short- and long-term business goals and plan for aggressive expansion to take advantage of the current favorable climate created by the pandemic and its aftermath.

Exploring global expansion is not only beneficial, but almost essential in today’s hyper-competitive and globalized world economy. Fintech’s unique nature and flexibility make it an ideal candidate for international ambitions.

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